Kickstarter set to launch in Japan, where hardware startups are finding it hard

Once enacted later this year, it’ll be much easier for Japanese entrepreneurs to take to Kickstarter. For the first time, they’ll be able to raise funds in yen and register projects under their local business credentials.

There have been a number of Japanese hardware startups raising money on Kickstarter in the past few years – such as Fove with its eye-tracking VR headset – but they’ve had to jump through some tricky hoops to do so.

“It will remove a barrier for Japanese creators – some had to find a partner in the US to run a campaign, which added friction,” says Benjamin Joffe from HAX, an investor in young hardware companies. Indeed, the Tokyo-based Fove team linked up with an associate in San Francisco before it could raise US$480,000 on Kickstarter for its VR gizmo.

Sony yet so far

Kickstarter’s Japanese expansion looks set to be a boost to local gadget startups, which have been slow to make the kind of impression made by illustrious forebears like Sony and Nintendo.

“Entrepreneurship is becoming cool in Japan,” said James Riney, 500 Startups’ Japan boss, last year. The late start is seen in the amount of venture capital pumped into startups in the country, which falls short of the amount pumped into tiny Singapore. (2016 saw US$689 million for Japan versus US$1.4 billion for Singapore’s startups, according to the Tech in Asia database.)

Joffe describes the state of Japanese hardware startups right now as “not great.”

“The number of startups is quite low, and many [hardware] projects are more like design or niche projects than high-tech startups,” he goes on. “The gap has widened between ‘makers’ and ‘startups’ – and Japan hasn’t quite crossed that bridge yet.”

It’s almost suicidal professionally and financially.

Of the 201 gadget-producing startups that Joffe has invested in with HAX, only two had Japanese co-founders. While he sees Kickstarter and rival platforms as being important to that growth, a lot more is needed.

“I think the problem is more fundamental: the lack of safety nets in Japan for entrepreneurs makes it almost suicidal professionally and financially,” he states. “As long as conditions do not change, I do not expect a rise in the number of startups” making hardware in Japan.

“For things to change, companies need to start valuing the startup experience, and hire or re-hire startup people,” the hardware expert explains. “This is truly the number one thing to fix – and corporates should realize that all the ‘open innovation’ talk will not work well without startup people on the inside. A few other things could be adjusted on the regulatory front: let entrepreneurs keep social benefits when they start a company, until they have a regular income, or allow sabbaticals from jobs.”

Once conditions do change, the lay of the land can transform quickly. “Surprisingly, France has been improving a lot on those safety nets and was much more visible than Japan at the latest CES in Las Vegas,” says Joffe, referencing startups, not major gadget brands. “Maybe some inspiration there.”